Back to the Basics – What Boehner is Forgetting at the Negotiating Table

In Washington, a temporary budget has been agreed upon, but the debate is really just beginning. No matter what happens at the negotiating table in the weeks and months to come, conservative rhetoric – “cuts, cuts, cuts” – will not cease; because they just don’t get it. A middle school teacher of mine put it simply: you’ve got to spend money to make money.

John Boehner and his cronies missed a critical lesson in their college Econ classes: the one in which the professor taught the ABCs of basic fiscal policy. Just as you can’t start a business without buying the capital necessary for it to thrive, Boehner can’t expect to reinvigorate the largest economy in the world without a willingness to invest in the programs and resources that will lead it to flourish down the road. The Speaker is wrong because the spending cuts he’s demanding – to the degree at which he hopes to pass them – will fail to fish the American economy out of the deep and opaque waters of recession.

When a country has plummeted into massive, debilitating debt – say, hypothetically, our country – it is reasonable to view deficit spending as a puzzling choice. But now, as Washington’s politicians become desperate and some of the United States’ most critical social programs hang in the balance, this is a question finding the lesser of two evils.

Expansionary fiscal policy pumps money into the public’s reserves. And as the government spends more, employment in domestic industries rises – and so does the productivity of those industries. Investment becomes cheaper and more people are opting into business deals. You can’t knit a blanket without the yarn, you can’t write a paper without doing the research, and you can’t grow an economy without capital investment.

There’s a name for John Boehner’s approach to the budget negotiations. Severe and tangible budget cuts are hallmarks of a contractionary fiscal policy – which is used to shrink the economy when it is being overproductive or when it begins to run the risk of creating dangerous bubbles. And in a country whose populace has a profound fear of the implications of China’s ever accelerating rise, that type of policy is far from appropriate.

The people who get the Republicans elected year in and year out – trade moguls, successful business owners, bigwig executives – have built their careers through financial investment. If the Koch brothers (or their like) treated the country as their business, they would advise their representatives to seek investment for future growth, not slice and dice the federal budget until it’s spread so thin that nothing substantive can be built upon it. It is in the interest of American industry – and the American employment rate – to continue to expand the economy.

When Republicans stand up in town meetings, or on the floor of the House and Senate and wag their fingers at the big, bad, hasty Democrats, they’re simply using scare tactics. The claim that (in a recession or deficit) all spending is disadvantageous is an infantile one. Spending cuts can be helpful in eliminating waste, but it isn’t wasteful to underwrite the American future. If we want lasting positive economic change – if we want to make money – then we’ve gotta spend money.


4 thoughts on “Back to the Basics – What Boehner is Forgetting at the Negotiating Table

  1. Why do you expect others to listen to and revere your points when you fail to demonstrate a lack of understanding for why other people have their opinions? You portray John Boehner as somebody who wants the economy to shrink. You make it seem like he wants the fiscal situation to be exacerbated when he is obviously trying to ameliorate the situation! Obviously, you are entitled to your opinion. However, in most of your articles, as well as this one, you do not accurately present the opposing argument nor do you show any impartiality.

    • @anonymous: Thanks so much for reading! I’d like to briefly respond to a few different parts of your comment.

      Firstly: I’m not impartial, nor do I claim to be. The pieces I write are opinion pieces, not news pieces. They are not intended to present a non-partisan viewpoint, but rather my own, which – by nature – is biased.

      Secondly: I don’t believe – nor did I write – that John Boehner wants to exacerbate the poor state of the economy. I believe, however, that he is going about it the wrong way. Also, it is unclear to me that he is “trying to ameliorate the situation” at all, as the fiscal choices that he tends to make reflect a desire to prevent further growth.

      I do my best to understand and accurately portray the opinion of the side against which I am arguing. Often times, though, I’m writing the piece in order to express my doubts about the soundness of a policy proposal or decision. I don’t expect anyone to “revere” my points; I simply hope that people will consider them and read them.

      Again, thank you for commenting, and please comment future articles – whether you agree or disagree with my premises. The debate is as meaningful as the article itself.

  2. I think that you do not quite understand the massive size of our debt (just the biggest part is $112 trillion, which will be roughly 9-10x our economy). Assume that there is no increase in the size in cost of what our government assumes; that is still way beyond anything we can hope to pay. When that is the case, you cannot expect any revenue stream to really cover that type of negative equity. You NEED to cut, drastically, to eliminate costs. Even with drastic tax increases, in which world do you expect to raise that kind of revenue? We’ll be rated a junk bond before we can borrow enough.
    Government isn’t really efficient at creating wealth, mostly at reallocating it. So for someone who thinks that wealth should be moved from oil to solar cells would support government taxation/spending. However, to someone who would prefer that it is done efficiently and in a manner that creates wealth in both places rather than just moves it by destroying the wealth of the former location, the free market reigns supreme. The Koch brothers would, indeed, demand investment, but only in growth markets. A fiscal dead end like Social Security would never be advised by even a stupid businessman. Those are where we need the cuts.
    That said, Boehner was completely out of place in the budget cuts he demanded. He was fighting over baby money over political reasons. That is why he ultimately is the loser of this battle. I understand your position, but I think you’re right for the wrong reasons. Government is poor at choosing growth markets and always accelerates bubbles, so it seems counterintuitive to me to suggest government action in order to produce economic prosperity.

  3. It sounds as if you have studied Economics this year and learned a great deal. The truth is, you’re correct, and most economists agree completely with you.

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